Estate of Leon Israel, Jr., Deceased, Barry W. Gray, Executor, and Audrey H. Israel - Page 21

            and in concluding that offsetting forward contracts in foreign                            
            currency constituted capital transactions:                                                

                  These offsets clearly constitute both "closure" under                               
                  section 1233 and a sufficient sale or exchange under the                            
                  general capital provisions to mandate capital treatment                             
                  here.  * * * [Id.]                                                                  

                  As use of the term "compensate" was not controlling in                              
            Hoover Co. v. Commissioner, 72 T.C. at 249, use of the term                               
            "cancellation" by petitioners in connection with the settlement                           
            of loss legs of their forward contracts is not controlling and                            
            should not mislead us here.                                                               
                  Respectfully, we believe that the Court of Appeals for the                          
            District of Columbia Circuit in Stoller v. Commissioner, 994 F.2d                         
            855, 856-857, erred in not recognizing the above case authority                           
            and holdings that establish the "closure" or "sale or exchange"                           
            nature of the termination of offsetting forward contracts.  Upon                          
            closing by offset of forward contracts, the transaction is                                
            terminated and extinguished, settlement between the parties                               
            occurs at that time, and no contracts remain in effect.  This is                          
            illustrated clearly in Appendix A-1 hereto under the caption                              
            "Straddles Opened And Closed -- 1980".  The four forward                                  
            contracts under this caption were opened on June 20, 1980, and                            
            were settled and closed 10 days later on June 30, 1980, by four                           
            offsetting forward contracts.  After June 20, 1980, in spite of                           
            the fact that four offsetting forward contracts were entered into                         

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